Copart Earnings: Expense Pressures Lead to a Soft End to the Year

Copart’s stock fell about 6% in Sept. 4 after-hours trading after the firm reported fourth-quarter fiscal 2024 diluted earnings per share of $0.33, down 8.3% year over year and missing the $0.36 LSEG consensus. We don’t see any change in our long-term view of the company’s wide-moat business, so we are leaving our fair value estimate unchanged. However, we will reassess all modeling inputs when we roll our model forward for the soon-to-be-filed 10-K. We see no reason to be alarmed by the quarter’s results as we calculate that the fourth-quarter free cash flow increased 60% to $301.3 million. July 31 liquidity was $4.6 billion, consisting of $3.4 billion in cash and investments plus $1.2 billion on the credit line. We would not mind a share buyback at or below $50 per share, given Copart’s ample cash and investments and the diluted share count increasing by 0.8% in fiscal 2024.